PRINCIPLE OF MARKETING
Philip Kotler & Gary Armstrong
Chapter 1. Marketing: Creating &
Capturing Customer Value
Senior lecturer: Dr. Le Thi My Linh
1-1
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1.
Define marketing and outline the steps in the marketing
process
2.
Explain the importance of understanding customers and the
marketplace, and identify the five core marketplace concepts
3.
Identify the key elements of a customer-driven marketing
strategy and discuss the marketing management orientations
that guide marketing strategy
4.
Discuss customer relationship management, and identify
strategies for creating value for customers and capturing value
from customers in return
5.
Describe the major trends and forces that are changing the
marketing landscape in this age of relationships
1-2
CHAPTER CONCEPTS
1. What Is Marketing?
2. Understanding the Marketplace and Customer Needs
3. Designing a Customer-Driven Marketing Strategy
4. Preparing an Integrated Marketing Plan and Program
5. Building Customer Relationships
6. Capturing Value from Customers
7. The New Marketing Landscape
8. So, What Is Marketing? Pulling It All Together
1-3
WHAT IS MARKETING?
Marketing Defined
Marketing is the process by which
companies create value for
customers and build strong
customer relationships to
capture value from customers
in return.
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WHAT IS MARKETING?
The Marketing Process
1.
Understand the marketplace and customer wants
and needs
2.
Design a customer-driven marketing strategy
3.
Construct a marketing plan that delivers superior
value
4.
Build profitable relationships and create customer
satisfaction
5.
Capture value from customers to create profit and
customer equity
1-5
Understand the
marketplace and
customers’ needs/wants
Create customer driven
marketing strategy
Build profitable
relationships & create
customer delight
Construct a marketing
program that delivers
superior value
Capture value from
customers to create profits
& customer quality
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UNDERSTANDING THE MARKETPLACE
AND CUSTOMER NEEDS
Customer Needs, Wants, and Demands
Needs are states of deprivation:
Physical—food, clothing, warmth, safety
Social—belonging and affection
Individual—knowledge and self-expression
1-7
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
Wants are the form that needs take as they are
shaped by culture and individual personality.
Demands are wants backed by
buying power.
1-8
Understanding the Marketplace
and Customer Needs
Market Offerings—Products, Services, and
Experiences
Market offerings are some combination of products,
services, information, or experiences offered to a
market to satisfy a need or want.
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Understanding the Marketplace
and Customer Needs
Market Offerings—Products, Services, and
Experiences
Marketing myopia is focusing only on existing
wants and losing sight of underlying consumer
needs.
Exchange is the act of obtaining a desired object
from someone by offering something in return.
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1-10
Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
 Value and satisfaction
Marketers
 Set the right level of expectations
 Not too high or too low
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1-11
Understanding the Marketplace
and Customer Needs
Exchanges and Relationships
Exchange is the act of obtaining a desired object
from someone by offering something in return.
Relationships consist of actions to build and
maintain desirable relationships.
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1-12
Understanding the Marketplace
and Customer Needs
Markets are the set of actual and potential buyers of
a product.
Marketing system consists of all of the actors
(suppliers, company, competitors,
intermediaries, and end users) in the system
who are affected by major environmental forces.
 Demographic
 Economic
 Physical
• Technological
• Political-legal
• Socio-cultural
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DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Marketing Management
Marketing management is the art and science of
choosing target markets and building
profitable relationships with them.
 What customers will we serve?
 How can we best serve these customers?
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Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Market segmentation: Dividing the markets
into segments of customers
Target marketing: Which segments to go after
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Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
De-marketing
 Marketing to reduce demand temporarily
or permanently
 The aim is not to destroy demand but to
reduce or shift it.
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Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Marketing management is:
 Customer management
 Demand management
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Designing a Customer-Driven
Marketing Strategy
Choosing a Value Proposition
The value proposition is the set of benefits or
values a company promises to deliver to
customers to satisfy their needs.
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production concept
Product concept
Selling concept
Marketing concept
Societal concept
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Designing a Customer-Driven
Marketing Strategy
Marketing Management
Orientations
The production concept is the
idea that consumers will favor
products that are available or
highly affordable.
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
The product concept is the idea that
consumers will favor products that offer the
most quality, performance, and features for
which the organization should therefore
devote its energy to making continuous
improvements.
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1-21
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
The selling concept is the idea that
consumers will not buy enough of the
firm’s products unless it undertakes a
large scale selling and promotion effort.
1-22
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
The marketing concept is the idea that
achieving organizational goals depends
on knowing the needs and wants of the
target markets and delivering the
desired satisfactions better than
competitors do.
1-23
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
The societal marketing concept is the idea that
a company should make good marketing
decisions by considering consumers’ wants,
the company’s requirements, consumers’
long-term interests, and society’s long-run
interests.
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PREPARING AN INTEGRATED
MARKETING PLAN AND PROGRAM
Marketing Mix
The marketing mix is the set of tools (four Ps)
the firm uses to implement its marketing
strategy:




Product
Price
Promotion
Place
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Preparing an Integrated
Marketing Plan and Program
Integrated Marketing Program
An integrated marketing program is a
comprehensive plan that communicates
and delivers the intended value to
chosen customers.
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1-26
Building Customer Relationships
Customer Relationship Management (CRM)
Customer relationship management is the
overall process of building and
maintaining profitable customer
relationships by delivering superior value
and satisfaction.
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Building Customer Relationships
Customer Relationship Management (CRM)
Customer perceived value is the difference
between total customer value and total
customer cost.
Customer satisfaction is the extent to which a
product’s perceived performance matches a
buyer’s expectations.
1-28
Building Customer Relationships
Customer Relationship Management (CRM)
Customer Relationship Levels and Tools
Basic relationship
Full relationships
Frequency marketing programs
Club marketing programs
1-29
Building Customer Relationships
The Changing Nature of Customer Relationships
Relating with more carefully selected customers uses selective
relationship management to target fewer, more profitable
customers.
Relating for the long term uses customer relationship
management to retain current customers and build
profitable, long-term relationships.
Relating directly uses direct marketing tools (telephone, mail
order, kiosks, Internet) to make direct connections with
customers.
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Building Customer Relationships
Partner Relationship Management
Partner relationship management refers to
working closely with partners in other company
departments and outside the company to
jointly bring greater value to customers.
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1-31
Building Customer Relationships
Partner Relationship Management
Partners inside the company is every function area
interacting with customers.
 Electronically
 Cross-functional teams
Partners outside the company is how marketers
connect with their suppliers, channel partners,
and competitors by developing partnerships.
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Building Customer Relationships
Partner Relationship Management
The supply chain is a channel that stretches from
raw materials to components to final products
to final buyers.
 Supply management
 Strategic partners
 Strategic alliances
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Capturing Value from Customers
Creating Customer Loyalty and Retention
Customer lifetime value is the value of the entire
stream of purchases that the customer would
make over a lifetime of patronage.
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Capturing Value from Customers
Growing Share of Customer
Share of customer is the portion of the customer’s
purchasing that a company gets in its product
categories.
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Capturing Value from Customers
Building Customer Equity
Customer equity is the total combined customer
lifetime values of all of the company’s
customers.
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1-36
Capturing Value from Customers
Building Customer Equity
Building the right relationships with the right
customers involves treating customers as
assets that need to be managed and
maximized.
 Different types of customers require different
relationship management strategies
 Build the right relationship with the right
customers
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The New Marketing Landscape
Major Developments
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
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The New Marketing Landscape
The New Digital Age
Recent technology has had a major impact on the ways
marketers connect with and bring value to their customers
Market research
 Learning about and tracking customers
Create new customized products
Distribution
Communication


Video conferencing
Online data services
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The New Marketing Landscape
The New Digital Age
Internet—creates marketplaces and
marketspaces
 Information
 Entertainment
 Communication
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The New Marketing Landscape
Rapid Globalization
The world is smaller.
Think globally, act locally.
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The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Marketers are being called upon to take greater
responsibility for the social and environmental
impact of their actions in a global economy.
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The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Social marketing campaigns encourage energy
conservation and concern for the environment
or discourage smoking, excessive drinking,
and drug use.
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The New Marketing Landscape
The Growth for Not-for-Profit Marketing
Colleges
Hospitals
Museums
Zoos
Orchestras
Religious groups
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PRINCIPLE OF MARKETING
Philip Kotler & Gary Armstrong
Chapter 2
Company and Marketing strategy
Senior lecturer: Asso.Prof.Dr. Le Thi My Linh
1-1
Companywide Strategic Planning:
Defining Marketing’s Role
Strategic Planning
 Strategic planning is the
process of developing and
maintaining a strategic fit
between the organization’s
goals and capabilities and
its changing marketing
opportunities.
2-4
Companywide Strategic Planning:
Defining Marketing’s Role
Defining a Market-Oriented Mission
 Mission statement: The organization’s
purpose, what it wants to accomplish in the
larger environment
 Market-oriented mission statement:
Defines the business in terms of satisfying
basic customer needs
2-5

Mission statement:
 Amazon.com: we make internet buying
experience fast, easy, and enjoyable-we are
the place where you can find and discover
any thing you want to buy online
 Adidas: we strive to be the global leader in
the sporting goods industry with sports
brands build on passion for sport and a
sporting lifestyle
 L’Ore’al: we sell life style and self
expression; success and status; memories,
hopes and dreams
2-6
Companywide Strategic Planning:
Defining Marketing’s Role
Setting Company Objectives and Goals
 Business objectives
 Marketing objectives
2-7
Developing SMART marketing
objectives
 S Specific: It should be clearly stated.
 M Measurable: The scale of measurement should be in
place.
 A Achievable: It should be achievable (given the
market situation).
 R Realistic: It should not be over- optimistic.
 T Time based: There should be a specified date of
completion.
8
Example of SMART Marketing
objectives
 To increase customer satisfaction by 10% over the next
12 months.
 To retain 70% of existing customers over the next 3
years.
 To acquire a 5% increase in market share over the next
3 months.
 To expand the distribution system to an additional 5
international markets within the next 12 months.
 To increase brand awareness, in our markets, by 20%
over the next 12 months.
9
Companywide Strategic Planning:
Defining Marketing’s Role
Designing the Business Portfolio
 The business portfolio is the collection of
businesses and products that make up the
company.
2-10
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
 Analyzing the current business portfolio is
the process by which management evaluates the
products and businesses making up the
company.
2-11
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business
Portfolio
 Identify key businesses making up the
company
 Assess the attractiveness of its various SBUs
 Decide how much support each SBU deserves
2-12
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business
Portfolio
 Identify key businesses making up the company:

A strategic business unit (SBU) is a unit of the
company that has a separate mission and
objectives that can be planned separately from
other company businesses.
 Company division
 Product line within a division
 Single product or brand
2-13
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current
Business Portfolio

Assess the attractiveness of
various SBUs and decide how
much support each deserves.
2-14
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
 Growth share matrix is a portfolio planning method
that evaluates a company’s strategic business units in
terms of their market growth rate and relative share.
 Strategic business units are classified as:
 Stars
 Cash Cows
 Question marks
 Dogs
2-15
BCG Market Growth Relative
Share Matrix
HIGH
Star
Problem
Child
Market
growth
rate
LOW
Cash cow
Dog
HIGH
LOW
Relative market share & profitability
16
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach


Stars are high-growth, high-share businesses or
products requiring heavy investment to finance rapid
growth. They will eventually turn into cash cows.
Cash cows are low-growth, high-share businesses or
products that are established and successful SBUs
requiring less investment to maintain market share.
2-17
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach


Question marks are low-share business units in
high-growth markets requiring a lot of cash to hold
their share.
Dogs are low-growth, low-share businesses and
products that may generate enough cash to maintain
themselves but do not promise to be large sources of
cash.
2-18
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
Problems with Matrix Approaches




Difficulty in defining SBUs and measuring market
share and growth
Time consuming
Expensive
Focus on current businesses, not future planning
2-19
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 The product/market expansion grid is a tool
for identifying company growth opportunities
through market penetration, market
development, product development, or
diversification.
2-20
Growing Your Market
M A R K E T
Existing
P
R
O
D
U
C
T
Existing
Market penetration
Increase market share
steal competitor’s
business
Low risk -Low return
New
Product development
Same market/
new product
New
Market development
Medium risk
Diversify
High risk
21
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 Product/market expansion grid strategies
 Market penetration
 Market development
 Product development
 Diversification
2-22
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing
 Market penetration is a growth strategy
increasing sales to current market segments
without changing the product.
 Market development is a growth strategy that
identifies and develops new market segments for
current products.
2-23
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 Product development is a growth strategy that
offers new or modified products to existing
market segments.
 Diversification is a growth strategy through
starting up or acquiring businesses outside the
company’s current products and markets.
2-24
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 Downsizing is the reduction of the business
portfolio by eliminating products or business
units that are not profitable or that no longer fit
the company’s overall strategy.
2-25
Planning Marketing: Partnering to
Build Customer Relationships
Partner Relationship Management
 Partner relationship management is the
process of:
 Working closely with partners in other company
departments to form an effective value chain that
serves the customer, as well as
 Partnering effectively with other companies in the
marketing system to form a competitively superior
value-delivery network.
2-26
Planning Marketing: Partnering to
Build Customer Relationships
Partnering with Other Company Departments
•
A value chain is a series of departments that
carry out value-creating activities to design,
produce, market, deliver, and support a firm’s
products.
2-27
Planning Marketing: Partnering to
Build Customer Relationships
Partnering with Others in the Marketing
System
 A value delivery network is made up of the
company, suppliers, distributors, and ultimately
customers who partner with each other to
improve performance of the entire system.
2-28
Marketing Strategy and the
Marketing Mix
Marketing Strategy
 A marketing strategy is the
marketing logic by which the
business unit hopes to achieve its
marketing objectives.

The company decide which customer it will
serve (segmentation and targeting) and how
(differentiation and positioning)
2-29
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing
Strategy
 Market segmentation is the
division of a market into
distinct groups of buyers who
have distinct needs,
characteristics, or behavior and
who might require separate
products or marketing mixes.
2-30
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy
 A market segment is a group of consumers who
respond in a similar way to a given set of
marketing efforts.
 Target marketing is the process of evaluating
each market segment’s attractiveness and
selecting one or more segments to enter.
2-31
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy
 Market positioning is the arranging for a product
to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of the
target consumer.
2-32
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
 The marketing mix is the set of controllable
tactical marketing tools—product, price, place,
and promotion—that the firm blends to produce
the response it wants in the target market.
2-33
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
 The four Ps
 Product
 Price
 Place
 Promotion
2-34
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
 Product is the goods and services in combination that the
company offers to the target market.
 Price is the amount of money customers have to pay to obtain
the product.
2-35
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
 Place is the company activities that make the product
available to target customers.
 Promotion is the activities that communicate the
merits of the product and persuade target customers to
buy it.
2-36
Marketing Strategy and the
Marketing Mix
The 4 Ps
Product
Price
Place
Promotion
versus
The 4 Cs
Customer solution
Customer cost
Convenience
Communication
2-37
Managing the Marketing Effort
Managing the marketing effort requires:
 Analysis
 Planning
 Implementing
 Controlling
2-38
Managing the Marketing Effort
Marketing Analysis
 Marketing analysis is the complete analysis of
the company’s situation in a SWOT analysis that
evaluates the company’s:
 Strengths
 Weaknesses
 Opportunities
 Threats
2-39
Managing the Marketing Effort
Marketing Analysis




Strengths include internal capabilities, resources, and
positive situational factors that may help to serve company
customers and achieve company objectives.
Weaknesses include internal limitations and negative
situational factors that may interfere with company
performance.
Opportunities are favorable factors or trends in the
external environment that the company may be able to
exploit to its advantage.
Threats are unfavorable factors or trends that
may present challenges to performance.
2-40
Managing the Marketing Effort
Market Planning
 Planning is the development of strategic and
marketing plans to achieve company objectives.
 Marketing strategy consists of the
specific strategies for target markets,
positioning, the marketing mix, and
marketing expenditure levels.
2-41
Managing the Marketing Effort
Market Planning

Sections of a marketing plan include:
 Executive summary
 Current marketing situation
 Threats and opportunities
 Objective and issues
 Action programs
 Budgets
 Controls
2-42
Managing the Marketing Effort
Marketing Implementation
 Implementing is the process that turns
marketing plans into marketing actions to
accomplish strategic marketing objectives.
 Successful implementation depends on how well
the company blends its people, organizational
structure, decision and reward system, and
company culture into a cohesive action plan that
supports its strategies.
2-43
Managing the Marketing Effort
Marketing Control

Controlling is measuring and evaluating results and
taking corrective action as needed.
 Operating control
 Strategic control


Operating control involves checking ongoing
performance against annual plan and taking corrective
action as needed.
Strategic control involves looking at whether the
company’s basic strategies are well matched to its
opportunities.
2-48
PRINCIPLE OF MARKETING
Philip Kotler & Gary Armstrong
Chapter 3
Marketing environment
Senior lecturer: Asso.Prof. Dr. Le Thi My Linh
1-1
Learning Objectives
After studying this chapter, you should be able to:
1. Describe the environmental forces that affect the
company’s ability to serve its customers
2. Explain how changes in the demographic and economic
environments affect marketing decisions
3. Identify the major trends in the firm’s natural and
technological environments
4. Explain the key changes in the political and cultural
environments
5. Discuss how companies can react to the marketing
environment
3-2
Chapter Outline
1. The Company’s Microenvironment
2. The Company’s Macroenvironemnt
3. Responding to the Marketing Environment
3-3
The Marketing Environment

3-4
The marketing environment includes the
actors and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with
customers.
The Marketing Environment
Marketing Environment
 The microenvironment consists of the actors
close to the company that affect its ability to
serve its customers, the company, suppliers,
marketing intermediaries, customer markets,
competitors, and publics.
3-5
The Marketing Environment
Marketing Environment
 The macroenvironment consists of the larger
societal forces that affect the microenvironment.
 Demographic
 Economic
 Natural
 Technological
 Political
 Cultural
3-6
The Company’s Microenvironment



3-7
The company
Suppliers
Marketing intermediaries
•
Customers
•
Competitors
•
Publics
The Company’s Microenvironment
The Company
Internal environment includes:
 Top management
 Finance
 R&D
 Purchasing
 Operations
 Accounting
3-8
The Company’s Microenvironment
Suppliers
 Provide the resources to produce goods and
services
 Treated as partners to provide customer value
3-9
The Company’s Microenvironment
Marketing Intermediaries
 Help the company to promote, sell, and
distribute its products to final buyers
 Include:
 Resellers
 Physical distribution firms
 Marketing services agencies
 Financial intermediaries
3-10
The Company’s Microenvironment
Marketing Intermediaries
 Resellers are the distribution channel firms that
help the company find customers or make sales
to them. These include:
 Wholesalers
 Retailers
 Physical distribution firms are the
distribution channel firms that help the
company to stock and move goods from their
points of origin to their final destination.
3-11
The Company’s Microenvironment
Marketing Intermediaries
 Marketing service agencies are the marketing
research firms, advertising agencies, media
firms, and marketing consulting firms that help
the company target and promote its products to
the right markets.
 Financial intermediaries include banks, credit
companies, insurance companies, and other
businesses that help finance transactions or
insure against the risks associated with the
buying and selling of goods.
3-12
The Company’s Microenvironment
Customers
 Customer markets consist of
individuals and households that
buy goods and services for
personal consumption.
 Business markets buy goods and
services for further processing or
for use in their production process.
3-13
The Company’s Microenvironment
Customers
 Reseller markets buy goods and services to
resell at a profit.
 Government markets buy goods and services to
produce public services or transfer goods and
services to others who need them.
 International markets consist of buyers in
other countries including consumers, producers,
resellers, and governments.
3-14
The Company’s Microenvironment
Competitors
 Firms must gain strategic advantage by
positioning their offerings against competitors’
offerings.
 Each firm should consider its own size and
industry position compared to those of its
competitors.
3-15
The Company’s Microenvironment
Publics
 Any group that has an actual or potential
interest in or impact on an organization’s ability
to achieve its objectives:
 Financial publics
• Local publics
 Media publics
• General public
 Government publics
 Citizen-action publics
3-16
• Internal publics
The Company’s Microenvironment
Publics
 Financial publics influence the company’s
ability to obtain funds—banks, investment
houses, and stockholders.
 Media publics carry news, features, and
editorial opinion—newspapers, magazines, and
radio and television stations.
 Government publics influence product safety
and truth in advertising.
3-17
The Company’s Microenvironment
Publics
 Citizen-action publics include consumer
organizations, environment groups, and
minority groups
 Local publics include neighborhood residents
and community organizations
 General publics influence the company’s public
image
 Internal publics include workers, managers,
volunteers, and directors
3-18
The Company’s Macroenvironment






3-19
Demographic environment
Economic environment
Natural environment
Technological environment
Political environment
Cultural environment
The Company’s Macroenvironment
Demographic Environment



3-20
Demography is the study of human populations
in terms of size, density, location, age, gender,
race, occupation, and other statistics.
Demographic environment is important
because it involves people, and people make up
markets.
Demographic trends include age, family
structure, geographic population shifts,
educational characteristics, and population
diversity.
The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population

Generational marketing is important in segmenting
people by lifestyle of life state instead of age.
3-21
The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
•
Baby boomers include people born between
1946 and 1964
•
3-22
Includes most affluent Asians
The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
 Generation X includes people born between
1965 and 1976. They tend to:
3-23

Have high divorce rates

Are concerned about the environment

Respond to socially responsible companies

Are less materialistic

Emphasize quality of life

Consumer organizations, environment groups,
and minority groups
The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
•
Generation Y includes people born between 1977
and 2000.
•
3-24
The Internet generation
The Company’s Macroenvironment
Demographic Environment
Changing Age Structure of the Population
•
3-25
Generation Z includes people born after 2000.
this group highly mobile, connected, and social
The Company’s Macroenvironment
Demographic Environment
The Changing Asian Family
More people are:

Divorcing or separating

Choosing not to marry

Choosing to marry later

Marrying without intending to
have children

Higher divorce rates

Increased number of working
women

More stay-at-home dads
3-26
The Company’s Macroenvironment
Demographic Environment
Geographic Shifts in Population
•
Trends include:
•
Migratory movements between and
within countries
•
Moving from rural to metropolitan areas
•
Changes in where people work
• Telecommuting
• Home office
• Divorce or separation
3-27
The Company’s Macroenvironment
Demographic Environment
Changes in the Workforce
Trends include:
 More educated
 More white collar
 More professional
3-28
The Company’s Macroenvironment
Demographic Environment
Increasing Diversity
 Markets are becoming more diverse
 International
 National
 Trends include:
 Ethnicity
 Gay and lesbian
 Disabled
3-29
The Company’s Macroenvironment
Economic Environment

Economic environment consists of factors that
affect consumer purchasing power and spending
patterns.
 Subsistence economies consume most of their own
agriculture and industrial output.
 Industrial economies are richer markets.
3-30
The Company’s Macroenvironment
Economic Environment
Changes in Income
 Value marketing involves ways to offer financially
cautious buyers greater value—the right combination of
quality and service at a fair price.
3-31
The Company’s Macroenvironment
Economic Environment
Changes in Income
 Income distribution
 Upper-class consumers
 Middle-class consumers
 Working-class consumers
 Underclass consumers
3-32
The Company’s Macroenvironment
Economic Environment
Changes in Consumer Spending Patterns
Ernst Engel—Engel’s Law
 As income rises:
 Percentage spent on food declines
 Percentage spent on housing remains constant
 Percentage spent on savings increases
3-33
The Company’s Macroenvironment
Natural Environment

3-34
Natural environment involves the natural resources
that are needed as inputs by marketers or that are
affected by marketing activities.
 Trends
 Shortages of raw materials
 Increased pollution
 Increased government intervention
 Environmentally sustainable strategies
 Green marketing
The Company’s Macroenvironment
Technological Environment

Most dramatic force in changing the marketplace with
many positive and negative effects
 Rapid change
 Provides new markets and new opportunities
 Internet
3-35

Medicine

Miniaturization

Weapons

Credit cards

Communication
The Company’s Macroenvironment
Political Environment

3-36
Political environment consists of laws, government
agencies, and pressure groups that influence or limit
various organizations and individuals in a given
society.
The Company’s Macroenvironment
Political Environment

Legislation regulating business
 Public policy to guide commerce—sets of laws and
regulations that limit business for the good of society
at large
 Increasing legislation to:
 Protect companies
 Protect consumers
 Protect the interests of society
3-37
The Company’s Macroenvironment
Political Environment
Increased Emphasis on Ethics and
Socially Responsible Actions
 Socially responsible behavior
occurs when firms actively seek out
ways to protect the long-term
interests of their consumers and
the environment
 Cause-related marketing
3-38
© Yukinobu Zengame
The Company’s Macroenvironment
Cultural Environment

3-39
The cultural environment consists of institutions and
other forces that affect a society’s basic values,
perceptions, and behaviors.
The Company’s Macroenvironment
Cultural Environment
Persistence of Cultural Values
 Core beliefs and values have a high degree of
persistence, are passed on from parents to children, and
are reinforced by schools, churches, businesses, and
government.
 Secondary beliefs and values are more open to change.
3-40
The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
 Major cultural values of a society are expressed in
people’s view of:
 Themselves
 Others
 Organization
 Society
 Nature and the universe
3-41
The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
 People’s view of themselves
 Yankelovich Monitor’s consumer segments:
 Do-It-Yourselfers—recent movers
 Adventurers
 People’s view of others
3-42
The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
 People’s view of organizations
 People’s view of society
 Patriots defend it
 Reformers want to change it
 Malcontents want to leave it
3-43
The Company’s Macroenvironment
Cultural Environment
Shifts in Secondary Cultural Values
 People’s view of nature
 Some feel ruled by it
 Some feel in harmony with it
 Some seek to master it
 People’s view of the universe
 Renewed interest in spirituality
3-44
Responding to the Marketing
Environment
Views on Responding

Uncontrollable
 Reacting and adapting to forces in the environment
 Proactive
 Taking aggressive actions to affect forces in the
environment
 Reactive
 Watching and reacting to forces in the environment
3-45
PRINCIPLE OF MARKETING
Philip Kotler & Gary Armstrong
Chapter 4
Managing information system
Senior lecturer: Asso.Prof.Dr. Le Thi My Linh
1-1
Learning Objectives
After studying this chapter, you should be able to:
1. Explain the importance of information to the company
and its understanding of the marketplace
2. Define the marketing information system and discuss its
parts
3. Outline the steps in the marketing research process
4. Explain how companies analyze and distribute marketing
information
5. Discuss the special issues some marketing researchers
face, including public policy and ethics
4-2
Chapter Outline
1.
2.
3.
4.
5.
6.
4-3
Assessing Marketing Information Needs
Developing Marketing Information
Marketing Research
Analyzing Marketing Information
Distributing and Using Marketing Information
Other Marketing Information Considerations
Assessing Marketing
Information Needs

A marketing information system (MIS)
consists of people, equipment, and procedures
to gather, sort, analyze, evaluate, and distribute
needed, timely, and accurate information to
marketing decision makers.
 Assess the information needs
 Develop needed information
 Analyze information
 Distribute information
4-4
Assessing Marketing
Information Needs
The marketing
information
system
4-5
Assessing Marketing
Information Needs

4-6
MIS provides information to the company’s
marketing and other managers and external
partners such as suppliers, resellers, and
marketing service agencies
Assessing Marketing
Information Needs

A good MIS balances the information users
would like to have against what they need and
what is feasible to offer.
 Issues to consider:
 Amount of information
 Availability of information
 Costs
4-7
Developing Marketing Information
Marketers can obtain information from:
 Internal data
 Marketing intelligence
 Marketing research
4-8
Developing Marketing Information
Internal Data

4-9
Internal databases are electronic
collections of consumer and market
information obtained from data
sources within the company
network, including accounting,
marketing, customer service, and
sales departments.
Developing Marketing Information
Advantages and Disadvantage of
Internal Databases
Advantages:
 Can be accessed more
quickly
 Less expensive
4-10
Disadvantages:
 Incomplete information
 Wrong form for decision
making
 Timeliness of
information
 Amount of information
 Need for sophisticated
equipment and
techniques
Developing Marketing Information
Marketing Intelligence
 Marketing intelligence is the systematic
collection and analysis of publicly available
information about competitors and
developments in the marketplace.
 The goal of marketing intelligence is to:
 Improve strategic decision making,
 Assess and track competitors’ actions, and
 Provide early warning of opportunities and threats.
4-11
Marketing Research
Marketing research is the
systematic design,
collection, analysis, and
reporting of data relevant to
a specific marketing
situation facing an
organization.
4-12
Marketing Research
Steps in the marketing research process
Defining the problem and research objectives
2. Developing the research plan
3. Implementing the plan
4. Interpreting and reporting the findings
1.
4-13
Marketing Research
Defining the Problem and Research Objectives
Types of objectives:
 Exploratory research
 Descriptive research
 Causal research
4-14
Marketing Research
Defining the Problem and Research Objectives



4-15
Exploratory research is the gathering of
preliminary information that will help to define the
problem and suggest hypotheses.
Descriptive research is to describe things such as
market potential for a product or the demographics
and attitudes of consumers who buy the product.
Causal research is to test hypotheses about causeand-effect relationships.
Marketing Research
Developing the Research Plan
The research plan
 Outlines sources of existing data
 Spells out the specific research approaches,
contact methods, sampling plans, and
instruments that researchers will use to gather
data
4-16
Marketing Research
Developing the Research Plan
The research plan is a written proposal that
includes:
 Management problem
 Research objectives
 Information needed
 How the results will help management decisions
 Budget
4-17
Marketing Research
Developing the Research Plan
 Secondary data consists of information that
already exists somewhere, having been collected
for another purpose.
 Primary data consists of information gathered
for the special research plan.
4-18
Marketing Research
Marketing Research
+ Advantages:
 Speed
 Cost
 Provides data that a
company cannot
collect on its own
4-19
– Disadvantages:
•
Availability
•
Relevance
•
Accuracy
•
Impartial
Marketing Research
Primary Data Collection
 Research approaches
 Contact methods
 Sampling plan
 Research instruments
4-20
Marketing Research
Research Approaches


4-21
Observational research involves gathering
primary data by observing relevant people, actions,
and situations.
Ethnographic research involves sending trained
observers to watch and interact with consumers in
their natural environment.
Marketing Research
Research Approaches

Survey research is the most widely used method
and is best for descriptive information—knowledge,
attitudes, preferences, and buying behavior.
 Flexible
 People can be unable or unwilling to answer
 Gives misleading or pleasing answers
 Privacy concerns
4-22
Marketing Research
Research Approaches
 Experimental research is best for gathering
causal information
 Tries to explain cause-and-effect relationships.
4-23
Marketing Research
Contact Methods
Mail questionnaires
 Collect large amounts of information
 Low cost
 Less bias with no interviewer present
 Lack of flexibility
 Low response rate
 Lack of control of sample
4-24
Marketing Research
Contact Methods
Telephone interviewing







4-25
Collects information quickly
More flexible than mail questionnaires
Interviewers can explain difficult questions
Higher response rates than mail questionnaires
Interviewers communicate directly with respondents
Higher cost than mail questionnaires
Potential interviewer bias
Marketing Research
Contact Methods
Mail, telephone, and personal interviewing
 Personal interviewing
 Individual interviewing
 Group interviewing
4-26
Marketing Research
Contact Methods

4-27
Personal interviewing

Individual interviewing

Involves talking with people at home or the office,
on the street, or in shopping malls

Flexible

More expensive than telephone interviews

Group interviewing or focus group interviewing

Involves inviting 6 to 10 people to talk with
a trained moderator
Marketing Research
Contact Methods
Online marketing research
 Internet surveys
 Online panels
 Online experiments
 Online focus groups
4-28
Marketing Research
Contact Methods
Online marketing research
 Low cost
 Speed to administer
 Fast results
 Good for hard-to-reach groups
 Hard to control who’s in the sample
 Lack of interaction
 Privacy concerns
4-29
Marketing Research
Sampling Plan

A sample is a segment of the population selected
for marketing research to represent the population
as a whole.
 Who is to be surveyed?
 How many people should be surveyed?
 How should the people be chosen?
4-30
Marketing Research
Sampling Plan
•
Probability samples: Each population member
has a known chance of being included in the
sample.
•
Non-probability samples: Used when probability
sampling costs too much or takes too much time.
4-31
Marketing Research
Research Instruments
•
Questionnaires
•
Mechanical devices
4-32
Marketing Research
Research Instruments
•
Questionnaires
• Most common
• Administered in person, by phone, or online
• Flexible
• Open-end questions
• Closed-end questions
4-33
Marketing Research
Research Instruments
•
Closed-end questions include all the possible
answers, and subjects are to make choices among
them.
• Provides answers that are easier to interpret and
tabulate
•
Open-end questions allows respondents to
answer in their own words.
• Useful in exploratory research
4-34
Marketing Research
Implementing the Research Plan
•
Collecting data
•
Processing the information
•
Analyzing the information
Issues to consider:
•
What if respondents refuse to cooperate?
•
What if respondents give biased answers?
•
What if interviewer makes mistakes or takes
shortcuts?
4-35
Analyzing Marketing Information
Customer Relationship Management (CRM)
•
Consists of sophisticated software and
analytical tools
•
Integrates customer information from all
sources
•
Analyzes it in depth
•
Applies the results to build stronger customer
relationships
4-36
Analyzing Marketing Information
Customer Relationship Management (CRM)
•
Data warehouses are comprehensive
companywide electronic databases of finelytuned, detailed customer information.
•
Uses:
• To understand customers better
• To provided higher levels of customer service
• To develop deeper customer relationships
• To identify high-value customers
4-37
Analyzing Marketing Information
Customer Relationship Management (CRM)
•
Touch points: Every contact between the
customer and company
•
•
•
•
•
•
•
4-38
Customer purchases
Sales force contacts
Service and support calls
Web site visits
Satisfaction surveys
Credit and payment interactions
Research studies
Distributing and Using Marketing
Information

4-39
Information distribution involves entering
information into databases and making it
available in a time-useable manner.
 Intranet provides information to employees and
other stakeholders.
 Extranet provides information to key customers
and suppliers
Other Marketing Information
Considerations
Marketing Research in Small Businesses and
Nonprofit Organizations
•
Need information about their industry,
competitors, potential customers, and
reactions to new offers
•
Must track changes in customer needs and
wants, reactions to new products, and
changes in the competitive environment
4-40
Other Marketing Information
Considerations
Marketing Research in Small Businesses and
Nonprofit Organizations
•
Sources of marketing information:
• Observing their environment
• Monitoring competitor advertising
• Evaluating customer mix
• Visiting competitors
• Conducting informal surveys
• Conducting simple experiments
4-41
Other Marketing Information
Considerations
Marketing Research in Small Businesses and
Nonprofit Organizations
•
Sources of marketing information:
• Secondary data
• Trade associations
• Chambers of commerce
• Government agencies
• Media
4-42
Other Marketing Information
Considerations
International Marketing Research
•
Additional and different challenges:
•
•
•
•
•
•
4-43
Level of economic development
Culture
Customs
Buying patterns
Difficulty in collecting secondary data
Hard-to-reach respondents
Other Marketing Information
Considerations
Public Policy and Ethics in Marketing
Research
•
Intrusions on consumer privacy
•
Consumer resentment
•
Misuse of research findings
4-44
1-1
PRINCIPLES OF MARKETING
Philip Kotler & Gary Armstrong
Chapter 5
Consumer market and consumer
buyer behavior
Senior lecturer: Asso.Prof.Dr. Le Thi My Linh
5-2
Learning Objectives
After studying this chapter, you should be able to:
1. Define the consumer market and construct a simple
model of consumer buyer behavior
2. Name the four major factors that influence consumer
buyer behavior
3. List and understand the major types of buying decision
behavior and the stages in the buyer decision process
4. Describe the adoption and diffusion process for new
products
5-3
Chapter Outline
1. Model of Consumer Behavior
2. Characteristics Affecting Consumer Behavior
3. Types of Buying Decision Behavior
4. The Buyer Decision Process
5. The Buyer Decision Process for New Products
6. Consumer Behavior Across International
Borders
5-4
Model of Consumer Behavior
•
•
Consumer buyer behavior refers to the
buying behavior of final consumers—
individuals and households who buy goods and
services for personal consumption.
Consumer market refers to all of the personal
consumption of final consumers.
5-5
Model of Consumer Behavior
Marketing stimuli consists of
the 4 Ps
• Product
• Price
• Place
• Promotion
Other stimuli include:
• Economic forces
• Technological forces
• Political forces
• Cultural forces
5-6
Characteristics Affecting
Consumer Behavior
Cultural Factors
Social Factors
• Buyer’s culture
• Reference groups
• Buyer’s subculture
• Family
• Buyer’s social class
• Roles and status
5-7
Characteristics Affecting
Consumer Behavior
Personal Factors
Psychological Factors
• Age and life-cycle stage
• Motivation
• Occupation
• Perception
• Economic situation
• Learning
• Lifestyle
• Beliefs and attitudes
• Personality and self-concept
5-8
Characteristics Affecting
Consumer Behavior
Culture is the learned
values, perceptions, wants,
and behavior from family
and other important
institutions.
5-9
Characteristics Affecting
Consumer Behavior
• Subcultures are groups of people within a
culture with shared value systems based on
common life experiences and situations.
• Chinese
• Indians
• Malays
• Eurasians
5-10
Characteristics Affecting
Consumer Behavior
• Social classes are society’s relatively
permanent and ordered divisions whose
members share similar values, interests, and
behaviors.
• Measured by a combination of occupation, income, education,
wealth, and other variables
5-11
Characteristics Affecting
Consumer Behavior
The major social classes:
• Upper class
• Middle class
• Working class
• Lower class
5-12
Characteristics Affecting
Consumer Behavior
Social Factors
Groups
• Membership groups have a direct influence and to
which a person belongs.
• Aspirational groups are groups to which an individual
wishes to belong.
• Reference groups are groups that form a comparison or
reference in forming attitudes or behavior.
5-13
Characteristics Affecting
Consumer Behavior
Social Factors
Groups
• Opinion leaders are people within a reference group
with special skills, knowledge, personality, or other
characteristics that can exert social influence on others.
• Buzz marketing enlists opinion leaders to spread the
word.
• Social networking is a new form of buzz marketing
• MySpace.com
• Facebook.com
5-14
Characteristics Affecting
Consumer Behavior
Social Factors
• Family is the most important consumer-buying
organization in society.
• Social roles and status are the groups, family,
clubs, and organizations to which a person belongs
that can define role and social status.
5-15
Characteristics Affecting
Consumer Behavior
Personal Factors
• Personal characteristics
• Age and life-cycle stage
• Occupation
• Economic situation
• Lifestyle
• Personality and self-concept
5-16
Characteristics Affecting
Consumer Behavior
Personal Factors
Age and life-cycle stage
• RBC Royal Band stages:
• Youth—younger than 18 years
• Getting started—18-35 years
• Builders—35-50 years
• Accumulators—50-60 years
• Preservers—over 60 years
5-17
Characteristics Affecting
Consumer Behavior
Personal Factors
• Occupation affects the goods and services bought
by consumers.
• Economic situation includes trends in:
• Personal income
• Savings
• Interest rates
5-18
Characteristics Affecting
Consumer Behavior
Personal Factors
• Lifestyle is a person’s pattern of living as
expressed in his or her psychographics.
• Measures a consumer’s AIOs (activities,
interests, and opinions) to capture information
about a person’s pattern of acting and interacting
in the environment.
5-19
Characteristics Affecting
Consumer Behavior
Personal Factors
SRI Consulting’s Values and Lifestyle (VALS)
typology:
• Classifies people according to how they spend
money and time:
• Primary motivations
• Resources
5-20
Characteristics Affecting
Consumer Behavior
Personal Factors
Primary motivations
• Ideals
• Achievement
• Self-expression
5-21
Characteristics Affecting
Consumer Behavior
Personal Factors
Resources
• High resources
• Innovators exhibit all primary motivations.
• Low resources
• Survivors do not exhibit strong primary
motivation.
5-22
Characteristics Affecting
Consumer Behavior
Personal Factors
Personality and Self-Concept
• Personality refers to the unique psychological
characteristics that lead to consistent and lasting
responses to the consumer’s environment.
5-23
Characteristics Affecting
Consumer Behavior
Personal Factors
Personality and Self-Concept
Brand personality refers to the specific mix of human
traits that may be attributed to a particular brand:
• Sincerity
• Excitement
• Competence
• Sophistication
• Ruggedness
5-24
Characteristics Affecting
Consumer Behavior
Personal Factors
Personality and Self-Concept
• Self-concept refers to people’s
possessions that contribute to and
reflect their identities.
5-25
Characteristics Affecting
Consumer Behavior
Psychological Factors
• Motivation
• Perception
• Learning
• Beliefs and attitudes
5-26
Characteristics Affecting
Consumer Behavior
Psychological Factors
Motivation
• A motive is a need that is sufficiently pressing to direct
the person to seek satisfaction.
• Motivation research refers to qualitative research
designed to probe consumers’ hidden, subconscious
motivations.
5-27
Characteristics Affecting
Consumer Behavior
Psychological Factors
Abraham Maslow’s
Hierarchy of Needs
• People are driven by
particular needs at
particular times.
• Human needs are
arranged in a hierarchy
from most pressing to
least pressing.
5-28
Characteristics Affecting
Consumer Behavior
Psychological Factors
• Perception is the process by which people select,
organize, and interpret information to form a meaningful
picture of the world from three perceptual processes:
• Selective attention
• Selective distortion
• Selective retention
5-29
Characteristics Affecting
Consumer Behavior
Psychological Factors
• Selective attention is the tendency for people to screen
out most of the information to which they are exposed.
• Selective distortion is the tendency for people to
interpret information in a way that will support what they
already believe.
• Selective retention is the tendency to remember good
points made about a brand they favor and to forget good
points about competing brands.
5-30
Characteristics Affecting
Consumer Behavior
Psychological Factors
• Learning is the changes in an individual’s behavior
arising from experience and occurs through interplay of:
• Drives
• Stimuli
• Cues
• Responses
• Reinforcement
5-31
Characteristics Affecting
Consumer Behavior
Psychological Factors
Beliefs and Attitudes
• Belief is a descriptive thought that a person has about
something based on:
• Knowledge
• Opinion
• Faith
5-32
Characteristics Affecting
Consumer Behavior
Psychological Factors
Beliefs and Attitudes
Attitudes describe a person’s relatively consistent
evaluations, feelings, and tendencies toward an
object or idea.
5-33
Types of Buying Decision Behavior
• Complex buying behavior
• Dissonance-reducing buying behavior
• Habitual buying behavior
• Variety-seeking buying behavior
5-34
Types of Buying Decision Behavior
Complex Buying Behavior
• Occurs when consumers are highly motivated in a
purchase and perceive significant differences among
brands.
• Purchasers are highly motivated when:
• Product is expensive
• Product is risky
• Product is purchased infrequently
• Product is highly self-expressive
5-35
Types of Buying Decision Behavior
• Dissonance-reducing buying behavior occurs
when consumers are highly involved with an
expensive, infrequent, or risky purchase, but see
little difference among brands.
• Post-purchase dissonance occurs when the
consumer notices certain disadvantages of the
product purchased or hears favorable things about
a product not purchased.
5-36
Types of Buying Decision Behavior
• Habitual buying behavior occurs when consumers
have low involvement and there is little significant
brand difference.
• Variety-seeking buying behavior occurs when
consumers have low involvement and there are
significant brand differences.
5-37
The Buyer Decision Process
Five stages in the buyer decision process
1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behavior
5-38
The Buyer Decision Process
Need Recognition
• Need recognition occurs when the buyer
recognizes a problem or need triggered by:
• Internal stimuli
• External stimuli
5-39
The Buyer Decision Process
Information Search
Information search is the amount of information
needed in the buying process and depends on:
• The strength of the drive,
• The amount of information you start with,
• The ease of obtaining the information,
• The value placed on the additional information, and
• The satisfaction from searching.
5-40
The Buyer Decision Process
Information Search
Sources of information:
• Personal sources—family and friends
• Commercial sources—advertising, Internet
• Public sources—mass media, consumer
organizations
• Experiential sources—handling, examining,
using the product
5-41
The Buyer Decision Process
Evaluation of Alternatives
Evaluation of alternatives is how the consumer
processes information to arrive at brand
choices.
5-42
The Buyer Decision Process
Purchase Decision
• The purchase decision is the act by the
consumer to buy the most preferred brand.
• The purchase decision can be affected by:
• Attitudes of others
• Unexpected situational factors
5-43
The Buyer Decision Process
Post-Purchase Decision
• The post-purchase decision is the satisfaction
or dissatisfaction the consumer feels about the
purchase.
• Relationship between:
• Consumer’s expectations
• Product’s perceived performance
5-44
The Buyer Decision Process
Post-Purchase Decision
• The larger the gap between expectation and
performance, the greater the consumer’s
dissatisfaction.
• Cognitive dissonance is the discomfort caused
by a post-purchase conflict.
5-45
The Buyer Decision Process
Post-Purchase Decision
• Customer satisfaction is a key to building
profitable relationships with consumers—to
keeping and growing consumers and reaping
their customer lifetime value.
5-46
The Buyer Decision Process for
New Products
• A new product is a good, service, or idea that
is perceived by some potential customers as
new.
• The adoption process is the mental process
an individual goes through from first learning
about an innovation to final regular use.
5-47
The Buyer Decision Process for
New Products
Stages in the Adoption Process
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption
5-48
The Buyer Decision Process for
New Products
Stages in the Adoption Process
• Awareness is when the consumer becomes
aware of the new product but lacks information.
• Interest is when the consumer seeks
information about the new product.
5-49
The Buyer Decision Process for
New Products
Stages in the Adoption Process
• Evaluation is when the consumer considers
whether trying the new product makes sense.
• Trial is when the consumer tries the new
product to improve his or her estimate of value.
• Adoption is when the consumer decides to
make full and regular use of the product.
5-50
The Buyer Decision Process for
New Products
Individual Differences in Innovation
•
Early adopters are opinion leaders and adopt new
ideas early but cautiously.
•
Early majority are deliberate and adopt new ideas
before the average person.
•
Late majority are skeptical and adopt new ideas only
after the majority of people have tried it.
•
Laggards are suspicious of changes and adopt new
ideas only when they become tradition.
5-51
The Buyer Decision Process for
New Products
Individual Differences in Innovation
5-52
The Buyer Decision Process for
New Products
Influence of Product Characteristics on Rate
of Adoption
• Relative advantage is the degree to which an
innovation appears to be superior to existing
products.
• Compatibility is the degree to which an innovation
fits the values and experiences of potential
consumers.
5-53
The Buyer Decision Process for
New Products
Influence of Product Characteristics on Rate
of Adoption
• Complexity is the degree to which the innovation
is difficult to understand or use.
• Divisibility is the degree to which the innovation
may be tried on a limited basis.
5-54
Consumer Behavior Across
International Borders
• Differences can include:
• Values
• Attitudes
• Behaviors
• The question for marketers is whether to adapt
or standardize the marketing.
1-1
PRINCIPLE OF MARKETING
Philip Kotler & Gary Armstrong
Chapter 6
Business market and business buyer
behavior
Senior lecturer: Asso.Prof.Dr. Le Thi My Linh
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Define the business market and explain how business
markets differ from consumer markets
2. Identify the major factors that influence business buyer
behavior
3. List and define the steps in the business buying-decision
process
4. Compare the institutional and government markets and
explain how institutional and government buyers make
their buying decisions
6-2
CHAPTER OUTLINE
1. Business Markets
2. Business Buyer Behavior
3. Institutional and Government Markets
6-3
BUSINESS MARKETS
Business buying process is the process where
business buyers determine which products and
services are needed to purchase and then find,
evaluate, and choose among alternative brands.
6-4
BUSINESS MARKETS
Business markets differ from consumer markets in:
Market structure and demand
Nature of the buying unit
Types of decisions and the decision-making process
6-5
Business Markets
Market Structure and Demand
Fewer and larger buyers
Geographic concentration
Derived demand


Inelastic demand
Fluctuating demand
Buyer and seller dependency
6-6
Business Markets
Market Structure and Demand
•
Supplier development is the systematic
development of networks of supplier-partners
to ensure an appropriate and dependable
supply of products and materials that they will
use in making their own products or resell.
6-7
Business Buyer Behavior
A Model of Business Buyer Behavior
6-8
Business Buyer Behavior
Marketing Stimuli
•
Similar to consumer buying, business buying
consists of the four Ps:
•
Product
•
Price
•
Place
•
Promotion
6-9
Business Buyer Behavior
•
Business buyer behavior refers to the buying
behavior of the organizations that buy goods
and services for use in production of other
products and services that are sold, rented, or
supplied to others.
•
Also included are retailing and wholesaling
firms that acquire goods to resell or rent to
others for profit.
6-10
Business Buyer Behavior
Marketing Stimuli
Additional stimuli include major economic forces:
•
Political
•
Economic
•
Technological
•
Cultural
•
Competitive
6-11
Business Buyer Behavior
Buyer Responses to Marketing Stimuli
•
Product or service choice
•
Supplier choice
•
Order quantities
•
Delivery
•
Service
•
Payment terms
6-12
Business Buyer Behavior
Buyer Responses to Marketing Stimuli
•
Marketers must understand what happens
within the organization and turn stimuli into
purchase responses.
6-13
Business Buyer Behavior
Major Types of Buying Situations
•
Straight rebuy
•
Modified rebuy
•
New task
6-14
Business Buyer Behavior
Major Types of Buying Situations
•
Straight rebuy is a routine purchase decision such
as a reorder without any modification.
•
Modified rebuy is a purchase decision that
requires some research where the buyer wants to
modify the product specification, price, terms, or
suppliers.
•
New task is a purchase decision that requires
thorough research such as a new product.
6-15
Business Buyer Behavior
Major Types of Buying Situations
•
Systems selling involves the purchase of a
packaged solution from a single seller.
•
Two-step process of selling:
•
Interlocking products
•
System of production, inventory control,
distribution, and other services to meet the
buyer’s need for a smooth-running operation
6-16
Business Buyer Behavior
Participants in the Business Buying Process
•
The buying center is all of the individuals and
units that play a role in the purchase decisionmaking process:
•
Users
•
Influencers
•
Buyers
•
Deciders
•
Gatekeepers
6-17
Business Buyer Behavior
Participants in the Business Buying Process
•
Users are those that will use the product or
service.
•
Influencers help define specifications and provide
information for evaluating alternatives.
•
Buyers have formal authority to select the supplier
and arrange terms of purchase.
•
Deciders have formal or informal power to select
and approve final suppliers.
•
Gatekeepers control the flow of information.
6-18
Business Buyer Behavior
Participants in the Business Buying Process
The buying center provides a major challenge:
•
Who participates in the process
•
Their relative authority
•
What evaluation criteria each participant uses
•
Informal participants
6-19
Business Buyer Behavior
Participants in the Business Buying Process
•
Economic factors
•
Personal factors
•
Environmental factors
•
Organizational factors
•
Interpersonal factors
6-20
Business Buyer Behavior
Major Influences on Business Buyers
Economic factors:
Personal factors:
Price
Emotion
Service
6-21
Business Buyer Behavior
Major Influences on Business Buyers
Environmental factors:
•
Demand for product
•
Economic outlook
•
Cost of money
•
Resource availability
•Technology
•Culture
•Politics
•Competition
6-22
Business Buyer Behavior
Major Influences on Business Buyers
Organizational factors:
•
Objectives
•
Policies
•
Procedures
•
Structure
•
Systems
6-23
Business Buyer Behavior
Major Influences on Business Buyers
Interpersonal factors:
•
Motives
•
Perceptions
•
Preferences
•
Age
•
Income
•
Education
•
Attitude toward risk
6-24
Business Buyer Behavior
The Buying Process
1.
2.
3.
4.
5.
6.
7.
8.
9.
Problem recognition
General need description
Product specification
Value analysis
Supplier search
Proposal solicitation
Supplier selection
Order-routine specifications
Performance review
6-25
Business Buyer Behavior
The Buying Process
1.Problem recognition occurs when someone in
the company recognizes a problem or need.
•
Internal stimuli
•
•
Need for new product or production equipment
External stimuli
•
Idea from a trade show or advertising
6-26
Business Buyer Behavior
The Buying Process
•
2.General need description describes the
characteristics and quantity of the needed item.
•
3. Product specification describes the technical
criteria.
•
4. Value analysis is an approach to cost reduction
where components are studied to determined if
they can be redesigned, standardized, or made
with less costly methods of production.
6-27
Business Buyer Behavior
The Buying Process
•
5. Supplier search involves compiling a list of
qualified suppliers.
•
6. Proposal solicitation is the process of
requesting proposals from qualified suppliers.
6-28
Business Buyer Behavior
The Buying Process
•
7. Supplier selection is the process when the
buying center creates a list of desired supplier
attributes and negotiates with preferred
suppliers for favorable terms and conditions.
•
8. Order-routine specifications is the final
order with the chosen supplier and lists all of
the specifications and terms of the purchase.
6-29
Business Buyer Behavior
The Buying Process
9.Performance review involves a critique of
supplier performance to the purchase terms.
6-30
Business Buyer Behavior
E-Procurement and Buying on the Internet
Online purchasing
•
Company buying sites
•
Extranets
6-31
Business Buyer Behavior
E-Procurement and Buying on the Internet
Advantages
•
Access to new suppliers
•
Lowers costs
•
Speed in order processing and delivery
•
Share information
•
Sales
•
Service and support
6-32
Business Buyer Behavior
E-Procurement and Buying on the Internet
Disadvantages
•
Can erode relationships as buyers search for
new suppliers
•
Lack of security
6-33
Institutional and Government
Markets
E-Procurement and Buying on the Internet
•
Institutional markets consist of hospitals,
nursing homes, and prisons that provide goods
and services to people in their care.
•
Characteristics
•
Low budgets
•
“Captive” audience
6-34
Institutional and Government
Markets
•
Government markets tend to favor domestic
suppliers and require suppliers to submit bids and
normally award to the lowest bidder
•
Carefully monitored
•
Affected by similar environmental factors
•
Good credit
•
Non-economic factors
•
Minority suppliers
•
Depressed suppliers
•
Small businesses
6-35
1-1
PRINCIPLE OF MARKETING
Philip Kotler & Gary Armstrong
Chapter 7
Customer driven- Marketing strategy:
creating value for target customers
Senior lecturer: Associ. Prof. Dr. Le Thi My Linh
After studying this chapter, you should be able to:
1. Define the three steps of target marketing: market
segmentation, target marketing, and market positioning
2. List and discuss the major bases for segmenting consumer
and business markets
3. Explain how companies identify attractive consumer and
business markets
4. Discuss how companies position their products for
maximum competitive advantage in the marketplace
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Learning Objectives
7-2
1.
2.
3.
4.
Market Segmentation
Marketing Target
Differentiation and Positioning
Positioning for Competitive Advantage
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Chapter Concepts:
7-3
1. Discuss the need to understand competitors as well
as customers through competitor analysis
2. Explain the fundamentals of competitive marketing
strategies based on creating value for customers
3. Demonstrate the need for balancing customer and
competitor orientations in becoming a truly marketcentered organization
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Market Segmentation
7-4
Market segmentation is the process that companies
use to divide large heterogeneous markets into
small markets that can be reached more efficiently
and effectively with products and services that
match their unique needs.
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Market Segmentation
7-5
•
•
•
•
Segmenting consumer markets
Segmenting business markets
Segmenting international markets
Requirements for effective segmentation
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Education South Asia Pte Ltd
Market Segmentation
7-6
Segmenting Consumer Markets
• Geographic
• Demographic
• Psychographic
• Behavioral
Copyright © 2009 Pearson
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Market Segmentation
7-7
Segmenting Consumer Markets
• Geographic segmentation divides the market into
different geographical units such as nations,
regions, states, counties, or cities.
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Market Segmentation
7-8
Geographic Segmentation - by nations
7-9
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Segmenting Consumer Markets
• Demographic segmentation divides the market into
groups based on variables such as age, gender,
family size, family life cycle, income, occupation,
education, religion, race, generation, and
nationality.
Copyright © 2009 Pearson
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Market Segmentation
7-10
Demographic segmentation occupation
7-11
Copyright © 2009 Pearson
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Segmenting Consumer Markets
• Demographic segmentation is the most popular
segmentation method because consumer needs,
wants, and usage often vary closely with
demographic variables and are easier to measure
than other types of variables.
Copyright © 2009 Pearson
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Market Segmentation
7-12
Segmenting Consumer Markets
• Age and life-cycle stage segmentation is the
process of offering different products or using
different marketing approaches for different age
and life-cycle groups.
• Gender segmentation divides the market based on
sex (male or female).
Copyright © 2009 Pearson
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Market Segmentation
7-13
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Age & Life Cycle
Segmentation – families
with young children
7-14
Market Segmentation
Copyright © 2009 Pearson
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Segmenting Consumer Markets
• Income segmentation divides the market into
affluent or low-income consumers.
7-15
Segmenting Consumer Markets
Psychographic segmentation divides buyers into
different groups based on social class, lifestyle,
or personality traits.
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Market Segmentation
7-16
Segmenting Consumer Markets
• Behavioral segmentation divides buyers into
groups based on their knowledge, attitudes,
uses, or responses to a product.
•
•
•
•
•
Occasion
Benefits sought
User status
Usage rate
Loyalty status
Copyright © 2009 Pearson
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Market Segmentation
7-17
Segmenting Consumer Markets
• Occasion segmentation divides buyers into groups
according to occasions when they get the idea to
buy, actually make purchases, or respond to a
product.
• Benefit segmentation requires finding the major
benefits people look for in the product class, the
kinds of people who look for each benefit, and the
major brands that deliver each benefit.
Copyright © 2009 Pearson
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Market Segmentation
7-18
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Occasion Segmentation – consumers buy
special items for occasions like birthdays
7-19
Segmenting Consumer Markets
• User status divides buyers into ex-users, potential
users, first-time users, and regular users of a
product.
• Usage rate divides buyers into light, medium, and
heavy product users.
• Loyalty status divides buyers into groups according
to their degree of loyalty.
Copyright © 2009 Pearson
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Market Segmentation
7-20
Market Segmentation
Copyright © 2009 Pearson
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Segmenting Consumer Markets
• Loyalty status divides buyers into groups according
to their degree of loyalty.
7-21
Using Multiple Segmentation Bases
• Multiple segmentation is used to identify smaller,
better-defined target groups.
• Geodemographic segmentation is an example of
multivariable segmentation that divides groups into
consumer lifestyle patterns.
Copyright © 2009 Pearson
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Market Segmentation
7-22
Market Segmentation
•
•
•
•
Customer-operating characteristics
Purchasing approaches
Situational factors
Personal characteristics
Copyright © 2009 Pearson
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Segmenting Business Markets
• In addition to the same segmentation variables as
consumers, business can also be segmented by:
7-23
Market Segmentation
•
•
•
•
Geographic location
Economic factors
Political and legal factors
Cultural factors
Copyright © 2009 Pearson
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Segmenting Business Markets
• Segmenting international markets
7-24
Segmenting Business Markets
• Intermarket segmentation divides consumers into
groups with similar needs and buying behaviors
even though they are located in different countries.
Intermarket segmentation – whether Japanese,
Chinese, Thais, or Indians, they all consume rice
Copyright © 2009 Pearson
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Market Segmentation
7-25
Requirements for Effective Segmentation
• To be useful, a market segment must be:
• Measurable
• Accessible
• Substantial
• Differentiable
• Actionable
Copyright © 2009 Pearson
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Market Segmentation
7-26
Requirements for Effective Segmentation
• Measurable: Examples include the size, purchasing
power, and profiles of the segments
• Accessible: Refers to the fact that the market can
be effectively reached and served
• Substantial: Refers to the fact that the markets are
large and profitable enough to serve
Copyright © 2009 Pearson
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Market Segmentation
7-27
Requirements for Effective Segmentation
• Differentiable: Refers to the fact that the markets
are conceptually distinguishable and respond
differently to marketing mix elements and programs
• Actionable: Refers to the fact that effective
programs can be designed for attracting and serving
the segments
Copyright © 2009 Pearson
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Market Segmentation
7-28
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
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Market Targeting
7-29
Evaluating Market Segments
• Segment size and growth:
• Smaller versus larger segments
• Growth potential
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Market Targeting
7-30
Evaluating Market Segments
•
Segment structural attractiveness:
• Competition
• Substitute products
• Power of buyers
• Power of suppliers
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Market Targeting
7-31
Evaluating Market Segments
•
Company objectives and resources:
• Competitive advantage
• Availability of resources
• Consistent with company objectives
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Market Targeting
7-32
Selecting Target Market Segments
• Undifferentiated marketing
• Differentiated marketing
• Concentrated marketing
• Micromarketing
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Market Targeting
7-33
Copyright © 2009 Pearson
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Market Targeting
7-34
Target Marketing Strategies
• Undifferentiated marketing targets the whole
market with one offer.
• Mass marketing
• Focuses on common needs rather than what’s
different
Copyright © 2009 Pearson
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Market Targeting
7-35
Selecting Target Market Segments
• Differentiated marketing targets several different
market segments and designs separate offers for
each.
• Goal is to achieve higher sales and stronger
position
• More expensive than undifferentiated marketing
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Market Targeting
7-36
Copyright © 2009 Pearson
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Differentiated marketing – Colgate targets
different market segments with different
types of toothpaste.
7-37
Selecting Target Market Segments
• Concentrated marketing targets a small share of a
large market
• Limited company resources
• Knowledge of the market
• More effective and efficient
Copyright © 2009 Pearson
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Market Targeting
7-38
Selecting Target Market Segments
• Micromarketing is the practice of tailoring products
and marketing programs to suit the tastes of
specific individuals and locations.
• Local marketing
• Individual marketing
Copyright © 2009 Pearson
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Market Targeting
7-39
Copyright © 2009 Pearson
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© Stephan Mosel
© Gene Lee
BK Double Rendang
Micromarketing – fast food chains like
Burger King introduce rendang burgers in
Singapore and Malaysia, where local
palates prefer spicy food.
7-40
Selecting Target Market Segments
• Local marketing involves tailoring brands and
promotion to the needs and wants of local
customer groups.
• Cities
• Neighborhoods
• Stores
Copyright © 2009 Pearson
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Market Targeting
7-41
Market Targeting
•
•
•
Increased marketing effectiveness in competitive markets
More customer-specific offerings
Challenges of local marketing:
•
•
•
•
Increased manufacturing and marketing costs
Less economy of scale
Logistics
Dilution of company image
Copyright © 2009 Pearson
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Selecting Target Market Segments
• Benefits of local marketing
7-42
Selecting Target Market Segments
• Individual marketing involves tailoring products
and marketing programs to the needs and
preferences of individual customers.
• Also known as:
•
•
•
One-to-one marketing
Mass customization
Markets-of-one marketing
Copyright © 2009 Pearson
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Market Targeting
7-43
Selecting Target Market Segments
• Mass customization is the process through which
firms interact one-to-one with masses of customers
to design products and services tailor-made to
meet individual needs. Has made relationships with
customers important in the new economy.
• Provides a way to distinguish the company against
competitors
Copyright © 2009 Pearson
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Market Targeting
7-44
Copyright © 2009 Pearson
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Mass customization by
banks to reach groups
of customers who hold
large sums of savings
and investments with
the bank
7-45
Choosing a Targeting Strategy
Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
Copyright © 2009 Pearson
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Market Targeting
7-46
Socially Responsible Target Marketing
• Benefits customers with specific needs
• Concern for vulnerable segments
• Children
• Alcohol
• Cigarettes
Copyright © 2009 Pearson
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Market Targeting
7-47
•
Product position is the way the product is defined
by consumers on important attributes—the place
the product occupies in consumers’ minds relative
to competing products.
• Perceptions
• Impressions
• Feelings
Copyright © 2009 Pearson
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Differentiation and Positioning
7-48
Differentiation and Positioning
Positioning maps show consumer perceptions of
their brands versus competing products on
important buying dimensions.
• Price and orientation
Copyright © 2009 Pearson
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•
7-49
7-50
Copyright © 2009 Pearson
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Choosing a Differentiation and Positioning Strategy
• Identifying a set of possible competitive advantages
to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
Copyright © 2009 Pearson
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Differentiation and Positioning
7-51
Differentiation and Positioning
•
•
•
•
•
Product differentiation
Service differentiation
Channels
People
Image
Copyright © 2009 Pearson
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Choosing a Differentiation and Positioning Strategy
• Identifying a set of possible competitive advantages
to build a position by providing superior value from:
7-52
Identifying Possible Value Differences and
Competitive Advantage
• Competitive advantage is the advantage over
competitors gained by offering greater value either
through lower prices or by providing more benefits
that justify higher prices.
Copyright © 2009 Pearson
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Differentiation and Positioning
7-53
© Nakedsky.org
© Rick Hall
Copyright © 2009 Pearson
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© James Cridland
Singapore Airlines may
charge a higher price, but
provides excellent services –
product and service
differentiation.
7-54
© juandazeng | Flickr.com
Differentiation and Positioning
•
•
•
•
•
•
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Copyright © 2009 Pearson
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Choosing the Right Competitive Advantages
• A difference is worth establishing to the extent that
it satisfies the following criteria:
7-55
Differentiation and Positioning
•
•
•
•
•
More for more
More for the same
Same for less
Less for much less
More for less
Copyright © 2009 Pearson
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Selecting an Overall Strategy
• Value proposition is the full mix of benefits upon
which a brand is positioned.
7-56
Copyright © 2009 Pearson
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Figure 7.7
Possible value
propositions
7-57
Developing a Positioning Statement
• Positioning statement states the product’s
membership in a category and then shows its
point-of-difference from other members of the
category.
Copyright © 2009 Pearson
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Positioning for a Competitive
Advantage
7-58
• A statement that summarizes company or brand
positioning using this form: To (target segment and
need) our (brand) is (concept) that (point of
difference).
• Evernote: “To busy multitaskers who need help
remembering things, Evernote is a digital content
management application that makes it easy to capture
and remember moments and ideas from your everyday life
using your computer, phone, tablet, and the web.”
Copyright © 2009 Pearson
Education South Asia Pte Ltd
Positioning statement: Form
7-59
Marketing strategy
Marketing Strategy and the
Marketing Mix
Marketing Strategy

A marketing strategy is the marketing
logic by which the business unit hopes
to achieve its marketing objectives.

The company decide which customer it will serve (segmentation and
targeting) and how (differentiation and positioning)
2-2
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy

Market segmentation is the division of a
market into distinct groups of buyers who have
distinct needs, characteristics, or behavior
and who might require separate products or
marketing mixes.
2-3
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy

A market segment is a group of consumers who
respond in a similar way to a given set of marketing
efforts.

Target marketing is the process of evaluating each
market segment’s attractiveness and selecting one or
more segments to enter.
2-4
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy

Market positioning is the arranging for a product to
occupy a clear, distinctive, and desirable place relative
to competing products in the minds of the target
consumer.
2-5
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix

The marketing mix is the set of controllable tactical
marketing tools—product, price, place, and
promotion—that the firm blends to produce the
response it wants in the target market.
2-6
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix

The four Ps
 Product
 Price
 Place
 Promotion
2-7
Managing the Marketing Effort
Market Planning


Planning is the development of strategic and marketing plans to achieve
company objectives.
Marketing strategy consists of the
specific strategies for target
markets, positioning, the
marketing mix, and marketing
expenditure levels.
2-8
Managing the Marketing Effort
Market Planning
Sections of a marketing plan include:
 Executive
summary
 Current
marketing situation
 Threats
and opportunities
 STP
 Marketing
Objectives
 Marketing
mix
 Action
programs
 Budgets
 Controls
2-9
Developing SMART marketing objectives

S Specific: It should be clearly stated.

M Measurable: The scale of measurement should be
in place.

A Achievable: It should be achievable (given the
market situation).

R Realistic: It should not be over- optimistic.

T Time based: There should be a specified date of
completion.
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Example of SMART Marketing
objectives

To increase customer satisfaction by 10% over the next 12 months.

To retain 70% of existing customers over the next 3 years.

To acquire a 5% increase in market share over the next 3 months.

To expand the distribution system to an additional 5 international
markets within the next 12 months.

To increase brand awareness, in our markets, by 20% over the next 12
months.
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